PRESS

With utility-scale solar, a number of incentive systems are in place for utility-scale solar systems. While the incentives are not as attractive as in the years past (lower FIT rates, capacity caps, project restrictions), they continue to attract interest from a number of developers.

These incentives include:

Thailand: Agro-solar Phase 2 – the winners were announced in June 2017 @ a FIT of $0.12/kwh for 25 years. In addition, 300 MWp of solar hybrid PPAs were also announced by the Thai Energy Policy and Planning office this year for a COD in 2020.

Malaysia: Phase 2 of the utility-scale solar auctions with a capacity of 460 MWp were announced in 2017.

Vietnam: Although the solar PPAs in Vietnam (at approximately US$0.0935/kwh) have been deemed not bankable by a number of business groups (due to the absence of a FIT indexation to the CPI, off-taker and dispute resolution risks), a number of developers still remain keen to pursue this market.

Indonesia: Although a solar FIT is in place in Indonesia, these rates are not the most attractive when compared to other SEA markets which makes the Indonesian solar market slightly less interesting for developers.

In the rooftop solar sector, the Philippines has some of the highest electricity rates in the region… residential and commercial consumers can pay as much as US$0.18/kwh and US$0.16/kwh respectively.

With these rates, rooftop solar energy is already competitive (in comparison with the end user tariff). Grid parity in the Philippines for rooftop solar has been achieved even as far back as a few years ago.

In Thailand, while there has been a limited uptake of solar rooftops in Thailand, rooftop installations have advanced to a certain extent with consumer owned rooftop systems and some leasing model projects, due to the decline in solar module costs.

All of SEA has significant potential given the growth in energy demand in these markets as a result of their growing economies and populations. In addition, the conditions in South East Asia are ideal for solar: from good irradiation levels, reasonable availability of land, low cost of labour and to a certain extent attractive financial support from government incentives.

Among these SEA markets, Vietnam has significant immediate potential. They not only have a solar FIT system in place but their reliance on importing coal to cover 50% of their electricity needs has also brought about a high interest for alternative energy sources.

Although Thailand could be considered slightly saturated, it still has fairly significant potential in rooftop PV and utility PV with the government’s (albeit more limited) Agro-solar program. Countries like Indonesia that rely heavily on diesel for primary power generation in remote regions offer very interesting potential for solar hybrid projects.

Myanmar will certainly come into the focus in the long-term as well – due to the size of their population and low electrification rate which suggest that Myanmar has amazing potential.

In addition, the Philippines would in theory be best positioned for the highest short term potential given its solar track record and the response the industry has shown during the 2 FIT rounds. With the huge volumes of solar deployed in the country, the country can take advantage of economies of scale which makes solar even more competitive. But discontinuing the FIT programme without a transparent and working bilateral PPA market has left the solar progress hanging for most parts.

The Philippines has the highest end-user electricity price in all of SEA (as much as US$ .18/kwh), which implies that solar PV is already at socket parity/grid parity in the Philippines and is competitive with a number of traditional power generation technologies.

Meanwhile, a number of the newly emerging SEA countries have very limited power infrastructure in place. But they are determined to build capacities in the short to medium term and they are seriously considering using RE technologies.

SEA project financing usually come with higher risks (government, policy/regulations, counterparties involved (ie offtaker), currency, land issues).

So the cost of debt is higher in SEA than in Europe. In some markets there are strong local banks so foreign banks find it difficult to compete (ie Malaysia, Philippines). Some markets are also currently considered unbankable by foreign commercial banks (i.e. Vietnam )

The project approvals/permitting process needs to be streamlined and made transparent. The permitting process is currently unclear and is generally cumbersome/time consuming in SE Asia. Too many government bodies are involved (on both the national/local levels) in approvals. This wastes a lot of time.

There needs to be a more stable regulatory environment in SEA (not changing every 6 months like in the case of Indonesia’s FIT for example). The FIT policy should be more consistent, so that developers can predict revenue streams for their projects and spend time managing all the other risks involved with development in SE Asia.

Obtaining adequate guarantees where necessary can be a challenge at times (i.e. when the offtaker of the power is a government owned entity with a very poor
credit profile). Developers need guarantees from the government to give comfort to the banks lending to the project.

In the next 12/18 months we hope to secure our first project in Vietnam.

In Thailand and the Philippines, Conergy continues to offer its services for ground-mounted PV projects although those markets are moving very slowly. But we expect to secure further contracts for utility scale solar in Thailand from Phase 2 of the Agro-solar program and in the Philippines for projects being built on a bi-lateral PPA basis and in the near future through implementation of the RPS.

In parallel a number of our existing clients are looking into commercial & industrial rooftop projects for which we are – with all our experience in this segment from the past decade – perfectly placed.

In addition to building new solar power plants, Solar Infrastructure Investment in South East Asia 11 Conergy also has a very healthy O & M business. We are currently providing operations and maintenance services for most of the plants we’ve built and recently set up our regional remote operations centre in Manila, where we monitor the progress and performance of all solar plants under our management in Asia Pacific. In the next 12/18 months we expect to have closed more O & M contracts even for plants not built by Conergy.